Built to last
City releases plan to tackle affordable housing shortage in Durango

Built to last

A "For Sale" sign sits in front of a home on 5th Avenue in downtown Durango. Each year, the housing market in Durango gets tighter and tighter, making it harder for residents to become homeowners. According to city officials the average income for Durango residents is well below what's needed to buy a home here./Photo by Jennaye Derge

Tracy Chamberlin - 01/11/2018

Everyone knows a good home is hard to find in Durango. Prices are high, stock is low, and it’s a challenge for both buyers and renters. The question for local leaders has been, what can be done about it?

With lofty goals and realistic expectations, the city’s Community Development staff set out on a years-long quest to figure out if there was anything they could do to help.

And, it turns out, there’s a lot they can do.

“I feel like we have a long way to go, but I think there’s a lot of opportunities for the city to do something good,” Mark Williams, city planner and project manager for the Durango Housing Plan, said.

All of staff’s ideas – from short-term to long-term – have been set out in the Durango Housing Plan, completed last October.

After receiving initial public feedback, the plan went to the City Planning Commission, where it received unanimous approval. Now, it heads to the City Council. Once approved, it will become part of the official canon for Durango policy, alongside the 2017 Comprehensive Plan.

Affordable housing is a familiar term because it’s been a problem for Durangoans for decades. City records show officials first acknowledged rising housing costs in the early 1980s, shortly after Durango Housing, a nonprofit public housing organization, started building the first subsidized housing projects in the city, which are still being used today.

According to Williams, this was the first of two waves the city went through trying to deal with the problem of affordable housing. The second started in the late 1990s and continued into the new millennium but soon died out. It seems to be something Durango comes back to every couple decades, and it’s time has come again.

Crunched by the numbers

Within the housing plan, city staff doesn’t just offer solutions, it also acknowledges the problem – shedding light on how hard it is for Durangoans to buy a home in Durango.

Home prices here are actually comparable to areas around New York, Washington, D.C, Los Angeles and Seattle, according to Williams. The same is true for the rental market, which has prices comparable to Aspen.

But, unlike those areas, Durangoans don’t earn the same incomes. According to the U.S. Department of Housing and Urban Development, the median income for a family of four in La Plata County is $69,500. However, Williams explained that in order to purchase the average home in Durango, a resident needs to earn about $90,000.

“People in essential jobs frequently earn less than they need for housing: teachers earn $45,000 to $50,000 or less; food service workers average in the $20,000s; and many workers in construction trades make in the $25,000- $45,000 range,” the housing plan reads. “When the plan states the importance of affordable workforce housing, these are the people who are most affected by the lack of it.”

In a recent study for the HomesFund, formerly known as the Regional Housing Alliance, city officials found that a resident earning minimum wage would need to work 96 hours a week just to afford the average rent in Durango.

So, whether it’s homebuyers or renters, the numbers don’t add up. It’s something that doesn’t stop with housing, either.

When residents spend too much just putting a roof over their head, they don’t have any money left to eat at local restaurants or shop at local stores. It’s a trend that dominoes into every sector of the local economy.

Essentially, everyone takes a hit.

And, it doesn’t stop with those looking to buy or rent a home. It’s also a struggle for those looking to build them.

Williams explained at the recent Planning Commission meeting how land, construction supplies and workforce cost more in Durango than in other Colorado communities.

“It’s just more expensive to build here than in the Front Range, Utah or New Mexico,” Williams said. “The point (of the housing plan) is to counter some of those inherent disadvantages.”

In an effort to assist both sides of the housing equation, city staff came up with six general policy goals and several action items they can start working on this year.

Eyes on the prize

The city’s six housing plan goals are:
• Increase affordable housing options;
• Create long-term affordability;
• Adopt market-friendly housing policies;
• Engage in land banking;
• Create a permanent Housing Trust Fund;
• Prioritize high-density infill development.

Durango needs 200 or more new units to be built every year just to meet demand. Although, last year was a banner year for building with more than 350 units added, it’s a record high, not an average year. And, not all of those units are affordable.

The goal identified in the plan is to create 1,000 housing units with long-term affordability by 2040, which would be nine percent of the city’s total housing stock.

Over time, increasing the supply of housing overall will improve availability and affordability. It would also have a positive effect on the local economy, help keep the market stable and ease the burden on developers.

In today’s marketplace, it’s impossible to build affordable housing without some kind of help. “Developers won’t build affordable housing projects unless they’re subsidized somehow,” Williams explained.

The most expensive part of development is the land, making it the biggest obstacle to affordable housing.
One way to address this issue is land banking. Land banking is when the government, a nonprofit or private partner buys land or gets it through annexation or other agreements with the goal of holding it for future housing development.

As time passes, the value of the land increases, but rather than pay the current market rate, a developer could get the banked land at either no cost or a reduced cost, thus reducing the up-front costs for development.

The issue, of course, is having the cash to purchase the land initially.

In order to have the capital, the city is considering the creation of a Housing Trust Fund.

This type of fund would be like a city bank account dedicated to affordable housing. According to city officials, the trust fund would not only allow the city to take advantage of potential land purchases and other opportunities as they arise, it would also give it leverage when it comes to negotiations and grant applications.

The coffers for the Housing Trust Fund could be filled through the Fair Share Program – an existing program that currently is used for mortgage assistance through Homes-Fund; a commercial linkage fee; impact fees; new taxes; state and federal funds; or transfer fees.

The transfer fee is something already in use at Three Springs. It’s called the voluntary Home Owner Association transfer fee and is a half-percent fee on every real estate transaction in the Three Springs neighborhood.

Unlike the Fair Share Program, which is a one-time fee paid up front by the developer, the voluntary transfer fee is collected over time.

“The city would get less money up front, but we’d get more money on the back end,” Williams said.

Finally, city officials plan to prioritize higher-density infill development.

Infill housing has its benefits, Williams said, such as built-in infrastructure and walkability to amenities. Because of these benefits, city officials plan to examine the city code and review other regulations, like parking requirements or height restrictions, to see if anything can be adjusted to promote more infill housing.

Along with a general direction for moving forward, city officials offered some short-, medium-and long-term goals in the housing plan.

All of the short-term goals can be addressed in the coming year. They include looking at expanding the city’s ADU program into other neighborhoods, looking for ways to increase density in existing neighborhoods, adjusting parking standards, considering ways to tap the vacation rental market, or even examining annexation opportunities.

The medium-term goals are focused on evaluating the Land Use and Development Code, the 2008 Fair Share Ordinance and fleshing out possible revenue streams for the Housing Trust Fund. Long-term the goals are land banking and creating the Housing Trust Fund.

After years of research, brainstorming and number-crunching, the Durango Housing Plan is ready for approval. Now, Williams and his team can focus on actually making it happen.

“We did all this work,” he said. “And it feels like we’re at the starting line.”